Estimating the Cost of a Roof Replacement

By now, we all know that a roof replacement is not a cheap job. Sure, you know that it is an expensive job but do you really know what makes up the cost of a roof replacement? Understanding what goes in the cost of a roof will help you get a fair price and negotiate a good deal with contractors.

This article will focus on the components of a roof replacement cost but will not focus on negotiating or choosing a roofing contractor. Make sure to browse our other articles on negotiating a good price on your roof replacement and choosing the right roof contractor as they will complement this article.

A roofer will look at many factors when pricing your roof replacement. Check out a list of factors below:

  • The size of your roof
  • The slope of your roof
  • Type of material to be installed
  • The complexity of your roof (different slopes and awkward shapes/sizes)
  • Current number of roofing layers
  • Roofing underlayment, ventilation, windows or other features to be installed
  • Amount of waste
  • Contractor labor costs and overhead
  • Contractor’s profit

The majority of contractors already have their numbers figured out (i.e. a base price per square which is 100 square feet) and simply adjust prices depending on the factors above.

The best way to explain the components of the cost of a new roof replacement or installation is to walkthrough the costs using an example. Let’s assume there’s a house with a roof that is 30 feet wide and 50 feet long. This roof would have a total size of 1500 square feet. If we assume the waste is 10%, the contractor would need 1600 square feet of shingles (or other roofing material) which translates into 16 squares (1600 / 100).

Materials and Labor:

The cost of the material will vary depending on the type of roofing material used. Asphalt is cheaper than metal but it also depends on the brand. Other materials are also priced into here such as the underlayment, ventilation, and accessories such as nails and supplies. The sum of this cost will provide you with the total material costs. In our hypothetical example, let’s say the total material cost is $2,400. This would translate into a material cost of $150 per square.

Most contractors already know how long it takes to tear down an existing roof and installing a new one. This is a simple calculation and they multiply the number of workers by the number of hours needed while taking into consideration employee taxes and worker’s compensation insurance. This is where the slope and complexity of your roof comes into play. A contractor will need more labor hours in order to install a complex roof.

 Overhead

Overhead is a standard cost for all businesses especially roofers. Most roofers have similar overhead. The estimate they give you highly depends on how much the contractor decides to allocate to their jobs. Typical overhead costs for roofers are worker’s comp, office expenses, vehicle expenses such as fuel, advertising, insurance and other miscellaneous costs.

Profit

Each roofing contractor builds a profit into their estimate. Roofers can charge as much as they want as their profit component however this won’t translate into many contracts for them. Competition keeps profit at bay. Contractors need to ensure that their prices remain competitive. There is a trade-off as contractors try to sell a quality roof replacement (which generally translates into a higher cost) yet homeowners usually simply look at the lowest price. Due to the high competition in the industry, in order to stay in business a contractor generally has a net profit of 25%. If the roofer does not have a high volume of jobs on the go, their profit will need to be higher than 25% in order to stay in business.

Example of a Typical Estimate

Let’s revisit our original example of a roof that is 30 feet wide and 50 feet long and calculate the total cost of a roof replacement. Keep in mind that this is not a definite number as there are many other factors that play in which cannot be quantified such as your location (labor wages vary from state to state and country to country) and competition (a higher density of contractors will drive profit margins lower). A roof replacement in New York City will be more expensive than one in a small town in Idaho.

We originally calculated that a 1500 square foot roof results in a total area of 16 squares.

1. Cost of roofing material and accessories: The cost of 1 square of asphalt shingles is on average $105. In additional the shingle, the underlayment and accessories adds up to another $40-50 per square.  This totals to on average $150 per square for the material and accessories.

 16 squares x $150 = $2400

2. Dump fees: One must also factor in the costs of dumping the old shingles. Dump fees are on average $50 per ton. About 8 squares make up 1 ton. Therefore a 1500 square foot roof would create 2 tons of thrash. In addition to the dumping fees, a dumpster needs to be rented which costs around $350.

In total, the dump fees would total $450 ($350 + 2 tons x $50).

3. Cost of Labor: The average wage for a roof installer is $15/hour. In addition, a foreman is needed at a cost of $20/hour. To rip and install a 15 square roof in one day, you would need 5 installers and one foreman. Therefore, the following are the labor costs.

 5 installers x $15/hour x 8 hours + 1 foreman x $20/hour x 8 hours = $780

The labor cost is inflated to do the worker’s compensation, payroll taxes and unemployment insurance which fall on the employer. This inflates the cost by 65%. Therefore the true labor cost total $1,285.

4. Cost of overhead: This cost is very difficult to estimate because it can vary significantly from contractor to contractor. For simplicity sake, let’s assume a typical contractor has $100,000 in overhead costs a year. Let’s also assume that a contractor will install 250 roofs a year (some weekends off plus days off for bad weather). This means that each roof is attributed an overhead of $400.

 Total Costs

Materials: $2,400

Dumpster: $450

Labor: $1,285

Overhead: $400

Total = $4,535

This total does not include any profit margin for the contractor. The average profit margin required for a contractor is 25%. Therefore we must add $1,134 to the cost. The total cost now becomes $5,700 (rounded), which comes out to $380 per square.

 Average Roofing Cost

Based on our example, we calculated a cost of $380 per square for a 1500 square foot roof. In general, I’ve seen roofing prices range anywhere from $300 to $450 per square therefore this estimate of $380 falls right near the middle of the average. If you get quoted anywhere outside that range, I would look very closely at the estimate. If you are quoted much less than $300 per square, there may be doubt of the quality of the contractor. If you are quoted more than $450 per square, the contractor may be including a huge profit margin.

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